What drives wealth creation?
Recently I had the pleasure of meeting the wonderful Jennifer Byrne, former 60 Minutes reporter and host of The Book Club on ABC. Jennifer told colourful stories about her wide and varied career, sharing with us the secrets of her success. I was surprised when, unprompted, she emphasised the importance of meeting Gina in her early days as a reporter.
Gina, a financial planner referred to Jennifer by a trusted associate, did all the things you would expect from a good financial planner. But what made the greatest impact on 26-year-old Jennifer was the focus Gina gave to building her own money management skills. Gina spent hours explaining how investment markets and asset allocation worked, making sure Jennifer understood the relationship between risk and return and how to mitigate risk through asset protection and insurance.
This empowered Jennifer to make her own decisions and feel confident about taking career risks – like putting her job on the line and incurring Kerry Packer’s wrath by speaking out against the concentration of media ownership and taking a huge pay cut, leaving 60 Minutes to take a Sydney radio job to spend more time at home and start a family.
The positive impact of Gina’s focus on skill development comes as no surprise to anyone who has trained staff, motivated a team or raised a child. Many will know from the work of bestselling author Daniel Pink, the feeling of mastery is one of the key elements of human drive. This was demonstrated to me recently by my eight-year-old daughter, who was decidedly underwhelmed by the off-the-shelf Scottish shortbread bought for her school’s international food day. When offered the opportunity to make her own, while more work, she jumped at the chance. Developing her measuring, addition, subtraction and fine motor skills resulted in huge satisfaction in the irregular-shaped final product for her (and me).
This is the benefit of working with a talented and caring adviser like Gina. The magic is not in delegating management of your finances to someone more knowledgeable and experienced than you. It comes from using their support to develop your own skills and having access to a sounding board when making your own decisions.
The restless desire to understand, achieve freedom and autonomy through competence is the hallmark of many financially successful people. It’s one of the reasons why many opt to self-manage their investments, for example their super.
While a self-managed super fund will certainly not be appropriate for everyone, it does give you the opportunity to “look under the hood”, take control of the investment decisions and responsibility for the legal, compliance and administration of your fund. This can generate a much greater feeling of engagement, satisfaction and control. The Tax Office is equally committed to ensuring self-managed super fund trustees have the relevant competence and confidence to run their own funds, with education and support material provided at the time of establishment and periodic assessments of skill level throughout the life of the fund.
Interestingly, like Jennifer Byrne, many of those most keen to build their financial skills and competence are the ones who obtain most benefit from quality professional advice. They are not seeking to delegate decision-making, but rather looking for an expert to help navigate their own path and achieve success on their own terms. They also tend to enjoy the process just as much as the outcome. We are all likely to be responsible for the management of our financial resources through 20 to 30 years of retirement, during which economic, legislative and market conditions can be expected to vary widely.
Remaining interested, engaged and enjoying the management of your money not only maximises financial returns, but will allow you to thrive in changing, and sometimes challenging, conditions.
Original article here